Invoice & Job Profit Calculator

Invoice profit analysis breaks down each invoice into its component costs to reveal the true profit earned. Start with the invoice total (excluding VAT, which is collected on behalf of HMRC and is not your income). Deduct direct material costs—the actual cost of goods, raw materials, or supplies consumed in fulfilling the order. Then deduct direct labour—wages or subcontractor fees directly attributable to this job, including employer NI and pension on those wages.

Next, allocate a share of overheads: rent, utilities, insurance, software, vehicle costs, and administrative salaries that are not directly tied to one job but support all work. Common allocation methods include a percentage of direct labour hours, a flat rate per job, or a proportion based on revenue. The remaining figure after all deductions is your net job profit.

Two related metrics give context: Profit margin (%) = Net profit ÷ Invoice total × 100, showing what percentage of revenue you keep. Markup (%) = Net profit ÷ Total costs × 100, showing the premium charged above costs. These differ—a 25% markup equates to a 20% margin. Tracking profit per invoice over time reveals which clients, services, or project types are most (or least) profitable, enabling better pricing decisions.

Calculating profit on UK invoices. Profit = Revenue − Direct Costs − Allocated Overheads. Sample £5,000 invoice: subcontractor £1,500; materials £500; overheads allocation £300 = £2,300 cost; profit £2,700 (54% margin). UK SME average margins: software/SaaS 70-90%; consultancy 50-75%; retail 25-35%; construction 15-25%; food service 5-15%.

UK invoice requirements 2026. Must include: 'Invoice' word; unique sequential number; date issued; supplier name + address + contact; customer name + address; description of goods/services; quantity and unit price; total amount; VAT rate + amount if VAT-registered; VAT registration number if applicable. Payment terms: typically 30 days standard; 7-14 days for small businesses to manage cash flow.

VAT on UK invoices. VAT-registered (over £90k turnover): must charge 20% (or 5% reduced/0% zero where applicable). VAT-inclusive invoice: shows total with VAT separately. Net £100 + 20% VAT (£20) = Gross £120. NOT VAT-registered: don't charge VAT, no VAT number on invoice. International B2B: 0% VAT (reverse charge — customer accounts for VAT in own country). International B2C: 20% UK VAT applies to UK customers only.

Late payment — UK rules. Statutory right: charge interest at 8% above Bank of England base rate (currently 4.75% = 12.75% combined) from day after invoice due. Compensation: £40-£100 per overdue invoice (fixed amount). Apply automatically after 30 days unless contract specifies otherwise. Statutory Late Payment of Commercial Debts (Interest) Act 1998. UK average B2B payment 56 days (vs 30 contracted) — chase early.

Common UK invoice mistakes. (1) Missing VAT number when required. (2) Wrong VAT rate (5% reduced is narrow). (3) Inconsistent invoice numbering. (4) Missing payment terms. (5) Cash basis vs accrual confusion (sole trader: cash basis allowed under £150k turnover). (6) Foreign currency invoices: HMRC accepts but must show GBP equivalent on submission. (7) Late HMRC reporting (MTD compliance for VAT-registered). HMRC fines: £200-£3,000+ for non-compliance.